Since it is a state law you'd have to sue in California court. If the courts there agreed with this interpretation, which they likely wouldn't, then there would be out of state permits issued until the California legilsature promptly changed the law.
The courts are likely to determine that by county or municipality the law is refering to municiplalities and counties within the state of California as state law has no jurisdiction over counties or municipalities outside of the state.
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anybody denied would have cause to sue in Federal court due to the constitutional bar against states discriminating against out-of-state residents in the handling of a Federally protected civil right
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Heller did not saying the carrying of weapons was a civil right. It said essentially that the possession of an operable handgun within the home for self defense is a constitutional right.